Commentary: Trade advocates hope for post-election progress

Thursday, November 08, 2012

Freight transportation and trade are likely to take a back seat to broader economic policy issues in the coming months as Congress and President Obama try to work together after a bruising election campaign.
The first challenge facing the lame duck session of Congress next week is reaching agreement on a fiscal plan that would override huge spending cuts and restore two-year-old payroll tax cuts and tax cuts on upper income earners from the Bush era that are set to expire. Economists warn the spending cuts could push the country back into recession and a sharp decline in the stock market indicates investors are nervous about what will transpire. The automatic trigger was set in place as an alternative to get necessary votes to raise the debt ceiling when House Republicans and the White House couldn’t agree on a deficit-reduction plan last year.
Unfinished items that could still be tackled during the end of the current session include a cybersecurity bill, a package of bills extending certain tax credits, granting Russia Permanent Normalized Trade Relations, a package of temporary duty suspensions, defense authorization and a farm bill.
The new 113th Congress next year is expected to turn its attention to raising the debt ceiling, confirming new cabinet appointments, implementing the new health care law and possibly immigration reform.
Transportation Secretary Ray LaHood recently suggested that infrastructure could be on the agenda. Congress last summer passed a two-year surface transportation bill that includes some program reforms for how highway aid to states is distributed and an effort to develop a national freight transportation plan. But the program is severely limited in scope and Congress will soon have to tackle how to raise revenues to address the deteriorating transportation system at a time when gas taxes and other user fees in the Highway Trust Fund are not enough to meet current obligations. LaHood said the DOT will have a long-term transportation plan ready for consideration in the early part of 2013.
On Wednesday, a Pennsylvania Republican threw his hat into the ring to challenge Florida's John Mica as chairman of the House Transportation and Infrastructure Committee. Republicans retained control of the House and will vote on committee leaders.
Meanwhile, Democrats increased their hold on the Senate by two seats, something that caught most pundits by surprise given that Democrats were defending a lot more seats than Republicans and had done poorly in the 2010 election.
Trade advocates say the big opportunities for President Obama next year are to finish negotiations on the Trans-Pacific Partnership, a sweeping free trade agreement involving most major Pacific nations outside of China, and starting free trade talks with the European Union.
Passing those deals would greatly expand export opportunities for U.S. businesses, Bill Reinsch, president of the National Foreign Trade Council, said.
“I don’t see our China policy changing a lot, although since they’re going through a significant change of leadership, it’s hard to predict what changes will occur on their side. It’s safe to say nothing will change very quickly. The ship of state there is more like an aircraft carrier than a dinghy,” he said.
Scott Miller, a former trade executive at Procter & Gamble and now a scholar on international trade at the Center for Strategic and International Studies, said Obama will act more restrained toward China after portraying himself as a fighter for manufacturing jobs by challenging China’s alleged unfair trade practices.
Obama, for example, will be careful about imposing anti-dumping duties on Chinese products as he did in his first term to stem the import of large volumes of super-cheap tires. "The Peterson Institue for International Economics found that the action destroyed more than 2,500 jobs, not including losses from the retaliatory actions taken by China, all while raising prices for U.S. consumers. The U.S.-China economic relationship is big, complicated and delicate, and Americans deserve better than misguided protectionism masquerading as policy,” Miller wrote in a column posted on the CSIS web site.
Miller also pointed to the possibility of striking more trade deals with Latin America and said that Congress appears willing to support a free-trade agenda given the comfortable victory margins on the Panama, Columbia and South Korea deals that were ratified in 2011.
The American Soybean Association said its top priorities for the next term passing a new comprehensive farm bill, expanding trade opportunities, and support for biodiesel and ethanol production.
“A hallmark of agricultural policy has always been its bipartisan nature. ASA urges the president as well as members of both the House and Senate return to Washington with a renewed sense of purpose next week, so we can all get back to work serving America’s hard-working families,” it said in a statement.
The National Association of Manufacturers offered a more muted response to Obama’s reelection than other organizations. It congratulated the new members of the 113th Congress, but didn’t congratulate President Obama.
“Our country faces many challenges in the days and months ahead, and manufacturers continue to stand ready to work with President Obama. The president talked about manufacturing throughout his campaign as he has during his first term in office, and we will continue to urge the administration to achieve real results to bring about a manufacturing renaissance.
“We’ll work with the administration to double exports, on ways to strengthen our workforce and prepare Americans for jobs in modern manufacturing. We will also continue to make our case for pro-growth energy and tax policies, and for common-sense regulation,” it said.
The U.S. Chamber of Commerce, which spent nearly $30 million supporting Republican candidates for the House and Senate, congratulated President Obama for his win and said it will use its expertise and influence to help establish policies that support American business growth.
“A principal goal was to defend the pro-business gains we made in Congress in 2010 and ensure balance in the federal government when it comes to policies affecting business,” Chamber President Thomas Donahue explained in a statement about the business federation’s extensive involvement in the election campaign. “That goal was achieved. We had also hoped to advance the pro-business position in the Senate, but the results were disappointing.”
Only two of 15 Senate candidates that received donations from the chamber won their races, according to the Center for Responsive Politics.
Donahue said the government should avoid the damaging financial trigger of tax increases and huge spending cuts by striking a deal that reforms entitlements, taxes and energy policy.
President Obama and Democratic leaders in Congress say the election was an endorsement of their policies on taxes, spending, entitlement reform, health care, immigration and other issues. But Republicans are likely to argue, according to Agricultural Transportation Coalition Executive Director Peter Friedman in a memo to members, that their control of the House, the majority of governors' offices and the majority of state legislatures, means they speak for the majority of Americans, despite the presidential results, and that they are justified in challenging President Obama.
One possible impact of the election is on the DOT's rework of hours-of-service regulations for truck drivers, Friedman said in an e-mail. Unions, which backed President Obama, continue to press for shorter limits on daily and weekly driving time, which motor carriers say will reduce their ability to operate enough trucks to meet customer needs if demand picks up. - Eric Kulisch